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Media Analyst: Philippe Dauman Will Be Fired, Viacom Stock Rewarded

Telsey Advisory Group also believes sale of a Paramount stake will go through and Les Moonves will stay safely atop CBS

Add the Telsey Advisory Group (TAG) to the growing list of informed folks who think Philippe Dauman will be fired from Viacom.

Media analysts at TAG expect Sumner Redstone will replace the French-born company chairman, president and CEO — despite Dauman’s support from the Viacom board. How? Well, Redstone will just replace the VIAB board, a possibility that TheWrap spelled out for readers yesterday.

That doesn’t mean TAG believes Redstone will win ‘em all. The group thinks the sale of a minority stake in Paramount Pictures will proceed, despite the chairman emeritus’ wishes to keep the film studio whole.

Both predictions would probably help the company’s struggling stock, which TAG believes is “oversold.”

Telsey has had VIAB stock’s target price at $53 for a while now. About an hour ago, it actually opened at $41.44 per share — and that was up.

“A Paramount stake sale could accelerate deleveraging, share repurchases and an S&P Upgrade,” analysts at TAG wrote in a Wednesday newsletter. “Should the Trust or [National Amusements, Inc.] be successful in replacing CEO Dauman, we believe the Street would reward VIAB with a multiple closer in-line with its peers.”

As far as CBS — the other company ostensibly controlled by Redstone through his privately held National Amusements holding company — TAG expects status quo to be the theme.

In other words, Leslie Moonves’ job as chairman and CEO is safe. Plus, Telsey doesn’t anticipate a forced re-merging of CBS and Viacom, an idea that’s been floated lately amid the drama over Viacom stock and leadership.

As far as Redstone’s desire to block a sale of a portion of Paramount Pictures, TAG suggested that any move now would probably be too little, too late. After all, the Dauman-led board already approved the stake sale, which is expected to close as early as the end of June.

“We don’t believe that Mr. Redstone (or the Trust) is in a position to replace enough Board members to reverse this decision by June,” TAG wrote. “We note that the sale would likely generate more than $1B in proceeds enabling VIAB to lower its debt leverage to its 2.75-times target by 4Q16 (September 2016), while still investing in the business and resuming share repurchases.”

Analysts concluded: “We believe an S&P upgrade could follow these events should revenue and EBITDA improve.”

Read TAG’s full report and analysis here.